China’s export growth slumped in April to its lowest level in almost two years, customs data showed Monday, as a Covid resurgence shuttered factories, sparked transport curbs and caused congestion at key ports.
The data shows the extent of growing damage to the world’s second largest economy as millions are confined to their homes — particularly in key business hub Shanghai — to stamp out its worst Covid resurgence since the early days of the pandemic.
Beijing has persisted with a strict zero-Covid policy involving lockdowns and mass testing, but the economic costs are mounting as manufacturing hubs and supply chains atrophy under gruelling restrictions.
Export growth plunged to 3.9 percent on-year last month, the Customs Administration said Monday.
While this was above analysts’ expectations of 2.7 percent growth according to a Bloomberg poll, it marked the lowest rate since June 2020.
Import growth was flat in April, an improvement from a 0.1 percent contraction in March, as Chinese consumers remain hesitant under a welter of restrictions across the country.
Customs spokesman Li Kuiwen tried to strike an upbeat note on Monday saying the economy still has room to make a turnaround and that its “positive fundamentals” remain unchanged.
But analysts are less optimistic.
“Export growth could get worse in the next couple of months due to the pandemic and China’s stringent Covid containment measures, falling external demand, and loss of orders to other regions,” Nomura chief China economist Ting Lu told AFP.
Export growth was among the key economic drivers of the last several quarters but could turn into a “drag” on the economy, he warned
Last month, China’s trade surplus came in at $51.1 billion, according to official data.
In April, China’s biggest city Shanghai was almost entirely sealed off as it became the epicentre of the country’s worst coronavirus surge, with many factories halting production and trucker shortage causing goods to pile up at its port.
Restrictions also appear to be looming in other cities, including the capital Beijing.
“Lockdowns in large cities like Shanghai and rising input costs are major reasons” behind the underwhelming trade figures, analyst Zhaopeng Xing of ANZ Research said.
While top leaders have offered words of reassurance for tech, infrastructure and jobs, experts warn that Beijing’s unswerving adherence to its zero-Covid strategy will continue to hack into growth.
“China faces a dilemma: how to contain Omicron outbreaks without causing too much damage to the economic activities,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.